6. The production function at Weedy's Grainery is Q = L¹4K¹/². If Weedy increases the scale of his operation from 16 units of labor and 1 unit of capital to 81 units of labor and 4 units of capital, how much does output expand? Does the firm exhibit increasing, decreasing or constant returns to scale? a. Output increases from Q=4 to Q= 36. The firm exhibits increasing returns to scale. b. Output increases from Q=4 to Q= 36. The firm exhibits diminishing returns to scale. c. Output increases from Q=2 to Q= 6. This firm exhibits increasing returns to scale. d. Output increases from Q=2 to Q= 6. This firm exhibits diminishing returns to scale.

6. The production function at Weedy's Grainery is Q = L¹4K¹/². If Weedy increases the scale of his operation from 16 units of labor and 1 unit of capital to 81 units of labor and 4 units of capital, how much does output expand? Does the firm exhibit increasing, decreasing or constant returns to scale? a. Output increases from Q=4 to Q= 36. The firm exhibits increasing returns to scale. b. Output increases from Q=4 to Q= 36. The firm exhibits diminishing returns to scale. c. Output increases from Q=2 to Q= 6. This firm exhibits increasing returns to scale. d. Output increases from Q=2 to Q= 6. This firm exhibits diminishing returns to scale.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Q38
K Suppose that a firm's production function is q=5x in the short run, where there are fixed costs of $1,000, and x is the variable input whose cost is $625 per unit. What is the total cost of producing a level of output q? In other words, identify the total cost function C(q). The total cost of producing ya level of output q is A. C(q)= 1,000. OB. OC. OD. OE C(q)= 1,000+ C(q)= 1,000+ C(q) = 1,000+ 625q² C(q)= 25 q² 25 625q² 25 0.5 q B Dollars per unit of output 2000- 1800- 1600- 1400- 1200- 1000- 800- 600 400- 200- a 12 14 10 Quantity nchack 18 (1) Incorrect
Suppose the long-run production function for a competitive firm is f(L,K)= L 1/3 K 1/4 , where L is the amount of labor and K is the amount of capital. The cost per unit of labor is w and the cost of capital is r, which is the interest rate. Fixed costs are zero. .a. Find the cheapest input bundle, i.e. amount of labor and capital, that yields the given output level of y. .b. Draw the conditional input demand functions for labor and capital in the L-y and K-y spaces. .c. Write down the formula and draw the graph of the firm’s total cost function as a function of y, using the conditional input demand functions. What is the relationship between the returns to production scale and the behavior of the total costs? .d. Write down the formula and draw the graph of the average cost and marginal cost functions, as functions of y.
A farm producing wheat has the following production function Q = 4L + 3K. Does the above function exhibit increasing, constant, or decreasing returns to scale? Prove and explain your answer.
Distinguish between economies of scale and constant returns to scale. What shape will the long-run average cost curve have for economies of scale and constant returns to scale
Suppose a firm doubles its inputs in the long run and as a result, output doubles. Which of the following is true? Selected answer will be automatically saved. For keyboard navigation, press updown arrow keys to select an answer This firm is experiencing economies of scale. b This firm is experiencing constant returns to scale This firm is not using the least-cost combination of capital and labor d This firm is growing too fast and reducing profits.
Give typing answer with explanation and conclusion
Refer to the figure on the right. Suppose the output of a large aluminum firm drops from 2 million pounds to 0.5 million pounds per year. The long-run average cost of producing aluminum will go from $ to $. (Enter your responses rounded to the nearest penny.) Cost per pound $2.80 2.10 1.60 b 0.50 1.00 1.50 2.00 2.50 Million of pounds of Aluminum per year LA